Time to Short the Sh*t… um Crap Out of Bonds
- Posted by Greg Harmon
- on January 30th, 2013
I have heard that a lot lately. And Treasury Bonds are looking weak. The daily chart of the Treasury Bond ETF ($TLT) is showing a break of a support area from 117.50 to 118.50 with Tuesday’s closing price. Price levels not seen since May 2012. And all of the Simple moving Averages (SMA) are pointing lower. In fact there was a Death Cross on Friday. Ominous right? The next gap area
lower forms between 111.70 and 112.70. $5 is some good coin. But the monthly chart may temper your enthusiasm to bet on the demise of Bonds. The bullish Andrew’s Pitchfork that has been in control since the ETF started shows that all that has happened is the Median Line attracting price and then a slight overshoot. This happened back in May 2012 as well before it launched higher, and boy does that 10+ year uptrend look strong. But there are some cracks in the story. The Relative Strength Index (RSI) is making a new lower low from the last touch at the Median Line and
continuing down, with a Moving Average Convergence Divergence histogram (MACD) that is negative this time and growing. The MACD signal line is also pointing lower. This view shows that it will be tough to gain traction until it falls below 108. And looking at the actual Treasury Bond Prices shows that the long term rising channel from 1994 is in control. Yes it is pulling back from the top of the channel and the RSI and MACD support a further move lower. But the 135 level, 7 points lower
will need to fail to provide support before there is a chance at the bottom of the channel, much less a bearish movement long term. So go ahead and get a little short. But it is not time yet to bet the farm on a collapse.
Join the Dragonfly Capital Views Premium Membership
Sign up here to get deeper analysis and nearly 50 trade ideas every week.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Put a Collar on Hewlett-Packard Stock, Not Your Cat
- Premium Earnings 11-25-14
- Silver Driving Higher For the Holidays
- Looking for 6% Upside in Lazard
- Premium Earnings 11-24-14
- Top Trade Ideas for the Week November 24, 2014: Bonus Idea
- Top Trade Ideas for the Week of November 24, 2014: The Rest
- Top Trade Ideas for the Week of November 24, 2014: The Rest Premium
- Top Trade Ideas for the Week of November 24, 2014: The Best
- SPY Trends and Influencers November 22, 2014